HARP Refinance Program Extended

By:: Peter King | March 14, 2011

The government-backed HARP program, which enables some underwater homeowners to refinance their mortgages, is being extended for another year.

The Federal Housing Finance Agency (FHFA) has announced that HARP, which stands for Home Affordable Refinance Program, will be extended through June 30, 2012. It had been originally set to expire on June 30 of this year.

The program, which is part of the government’s Making Home Affordable mortgage assistance program, enables homeowners in negative equity – that is, those who owe more on their mortgage than their home is worth – to refinance mortgage debt of up to 125 percent of their homes current property value.

It’s a companion to the more widely known Home Affordable Modification Program – HAMP – which helps homeowners in financial difficulty obtain loan modifications, that is, more favorable terms on their current mortgage.

To date, HARP has enabled 623,000 homeowners to refinance their mortgages, with loan-to-value ratios ranging from 80 percent to 125 percent, according to the FHFA. The program is available only on mortgages that are backed by either Fannie Mae or Freddie Mac.

The extension comes at a time when Republicans in the House of Representatives have been approving legislation to kill HAMP and a number of other government mortgage assistance programs, claiming they are costly and ineffective. The House Financial Services Committee voted last week to approve a bill that would end HAMP; the measure now goes to the whole House for approval.

The full House also approved two other bills last week that would end the newly established FHA Short Refinance Program and another program providing temporary mortgage assistance for unemployed homeowners.

None of the measures are likely to get far in the Senate, which is controlled by Democrats who generally see the program as providing important assistance to the middle class during an economic downturn. Even is they should get through the Senate, the White House has said President Obama will veto such measures.

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